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Legal Malpractice Suit Over Structured Settlement Set For Trial January 9, 2023

by Structured Settlement Watchdog  

A legal malpractice case over a structured settlement, brought by a former plaintiff against the law firm of Anapol Weiss now has a trial date of January 9, 2023. This continues our ongoing commentary.

The Backstory to Structured Settlement Alleged Legal Malpractice (Abridged Edition)

I've covered the backstory more extensively in other posts. See most recent from May 1, 2022 post  Beef Yerkes | ELNY Era Legal Malpractice Case Continues Against Anapol Weiss

Briefly, on the advice of his lawyers Eric Yerkes, a young air crash survivor, entered into a structured settlement in the 1980s, with Cessna Aircraft and its London market insurers. The structured settlement was funded with Executive Life Insurance Company of New York, a company that any savvy person would know at the time was laden with junk bonds, at a time when contemporary prime time print and TV news media had observed severe financial impairments of two other annuity issuers. Five years later, ELNY was under supervision of New York's insurance regulator. In August 8, 2013 ELNY was liquidated and restuctured into GABC, 1500 annuitants were set to receive up to 66% less than they were owed under their annuity contracts. One of those was Eric Yerkes.

Yerkes' attemp to recover from Cessna and the London market insurers failed, due to Yerkes having already released them when the qualified assignment went into effect nearly 30 years earlier. Consequently  Yerkes v Cessna became a seminal case for novation under a qualified assignment. 

Yerkes then went after his lawyers for legal malpractice based upon, among other things, alleged lawyer representations made in alleged communication with Yerkes about Cessna's and the London underwriters' post qualified assignment responsibilities  that were incorrect.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
ERIC YERKES,
Plaintiff,
v.
ANAPOL WEISS,
Defendant.
Civil No. 17-2493-KMW-AMD
                                                                                              

                                                                                                                                                                                                                                                                                                                                                                                                                                            

USAA Celebrates 100 Years in Business

by John Darer CLU ChFC MSSC CeFT RSP CLTC

We're pleased to have a business relationship with USAA Life Insurance Company . The San Antonio based USAA was founded June
20,1922 by a group of soldiers to take care of their own. Over the years the USAA customer base has explanded.

USAA Structured Settlement Annuity Issuer

Today the A++(Superior) A.M. Best rated insurer has become a highly respected issuer of structured settlement annuities for a wide spectrum of claimants, particularly competitive for use as a qualified funding asset to fund long duration cash flows as payment of damages in on personal physical injury, physical sickness and wrongful death in medical malpractice, aviation, trucking, maritime and other types of legal settlements.

USAA ranks 25th on Fortune’s 2022 list of the world’s most admired companies. The ranking is based on the magazine’s poll of about 3,700 corporate executives, corporate directors, and business analysts. 

USAA ranks 96th in the 2022 US Fortune 500 and 330th in the Global Fortune 500.

USAA is one of the Wards 50 Life & Health Insurers for 2021 (29 years).

Watch a short video about the history of USAA, immediately below

Read more about

What is a Structured Settlement?

What is Settlement Planning?

Structured Settlements for Minors

Structured Settlements for Seniors

USAA Life Insurance Company does not write structured settlement annuities in taxable damage cases or where litigation is in the State of New York.

Last updated May 19, 2023

 

 

 

NJ Association Of Justice "Partners" With Structured Settlement Factoring Company

by Structured Settlement Watchdog

Lynne M Kizis, President of the New Jersey Association for Justice has written an endorsement of Canadian structured settlement factoring company Strategic Capital in which the amount of the $3,000.00 financial contribution to NJAJ plays a prominent role. A Business Partner of the New Jersey Association which pays $3,000.00 annually is considered a Copper Partner and each and every member of NJAJ is made aware of business partners' financial contributions.

Strategic Capital is one of the many companies in the structured settlement secondary market whose value proposition is to pay pennies on the dollar in

Bad Optics |  What Does Taking $3,000 from a factoring company say about NJAJ's strategic vison?

exchange for the hard earned future periodic payments that New Jersey trial lawyers have fought for their clients to receive. The Lynn Kizis letter is a disgrace and embarrassment, in my opinion, and appears to demonstrate that the New Jersey Association for Justice is more concerned about getting a few thousand dollars in the door from a company in an unregulated industry that has no licensing standard or meaningful regulation of sales practices that have proven harmful to consumers all across the country.  

Is Taking Financial Inducements For Endorsements Of Structured Settlement Factoring Companies Consistent With NJAJ Mission?

Should members of NJAJ be aware of national news stories that have appeared in the Washington Post about annuitants and investors in structured settlement payments rights who have been screwed?  

NJAJ says in its advertising that it is dedicated to preserving justice for all and protecting people’s rights by working to strengthen the laws for safer products and workplaces, a cleaner environment and quality health care.  A Pennsylvania retired couple invested just under $153,000 of retirement money with a New Jersey company in a factored structured settlement payment stream and lost it all because of a fraud in the origination of the deal for which the New Jersey company was brokering. Yes lost it all. The New Jersey company inaccurately marketed the investment as an annuity and it was clear that transactional risk was never discussed in the marketing hype.  [ see Deposed Parties in Wall v Altium Group LLC Misrepresented the Nature of What Retirees Were Buying Multiple Times]

Then there was a case in March 2019 where the Superior Court in Morris County overturned a transfer where a 20 year old NJ resident was solicited by a Philadelphia factoring company and induced to sign papers to transfer payments for someone who was the midst of what was described as a "full blown psychotic episode" and was hospitalized.

Bad Optics for Trial Lawyer Associations

The Consumer Attorneys of California recently issued a similar endorsement letter which will be covered in a separate post.

 

 

 

 

 

 

 

 

Structured Settlement Transfers | NJ Judge Masterclass On How to Evaluate "Best Interest"

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

Judge Nelson Johnson is THE MAN when it comes to NJ structured settlement transfers.  How refreshing to see a judge who takes his responsibility seriously and doesn't rubber stamp structured settlement transfers.  Judge Nelson's decision in the matter of In re Keena, No. L-1004-15, 2015 BL 315298 (N.J. Super. Ct. Law Div. June 18, 2015) [2015 BL 315298, a structured settlement transfer that was approved, is a masterclass in how judges should be evaluating "best interest" in structured settlement transfers.

In his decision Judge Johnson discloses that the following questions are routinely posed by his court, to payees on the sale of structured settlement payments:

1. Date of birth?
2. How far did you go in school?
3. Where and with whom do you live?
4. Is anyone dependent upon you?
5. Do you have any other source of income beyond annuity payments?
6. Tell me about the lawsuit that resulted in the payments you hope to sell.
7. Discuss/detail the injuries sustained giving rise to the claim.
8. Do you expect you will require future medical treatment for these injuries?
9. Did you understand the terms of the structured settlement when you agreed to it?
10. What has changed  making the payment  schedule not satisfactory?
11. Who was the lawyer who handled that claim? Have you conferred with him/
    her regarding this proposed sale?
12. Have you sought advice from anyone (professional or trusted friend) as to whether this a good
    move for you? Who?
13. Tell me about the payments from prior sale(s) of any structured settlement payable to you: how
    were those funds used?
14. If this transfer is approved, please detail how the funds will be used?
15. Explain how the sum to be paid to you will benefit you to such a degree that it is better to
    receive that reduced sum now, rather than receiving the full amount on the date you originally
    agreed
    ________________________________________________________________

What a Contrast!

Contrast the care taken by Judge Nelson C. Johnson with the "WTF method* " apparently used by the Portsmouth Virginia Circuit Court Judges in approving 11 structured settlement transfers for Terrence Taylor in 2 years.  As I have shown from information posted by that Court, the Portsmouth docket has been crammed with as many structured settlement transfer hearings into an hour as it can. Clearly the questions that the exemplar Judge Nelson C. Johnson poses,  would take longer than the 1-2 minutes per case that were allocated to Judge Dean Sword Jr. on one of the docket days I highlighted in a prior post.

* there's just no way to sugar coat it

___________________________________________________________________

The key takeaways from Judge Nelson C. Johnson's decision are these:

• The court must never lose sight of the fact that at the time the structured settlement was entered into the purpose was to create a degree of financial security for the injured person. Ordinarily, at the time a structured settlement payment schedule is established by a plaintiff, or a plaintiff's parents and legal counsel, the purpose is to provide a degree of financial security, assuring that funds will be available at various benchmarks in a person's life. In short, it is a good faith effort to save people from themselves, by insulating injured persons from the temptation to possibly squander their settlements, leaving them unable to provide for themselves or their dependents. This purpose, and the right of any competent adult to choose how best to handle his or her own finances, creates a tension that can only be resolved by engaging in, what is of necessity, a case by-case assessment of that person's situation and how the proposed transaction will benefit them long term.
• As learned first-hand by trial judges across the nation, and as revealed by the above sampling of case law, the responsibility of the court is a heavy one. The court's obligation is much more than merely inquiring into whether the payee is competent and has voluntarily entered into the agreement with knowledge of its consequences. It is not enough for the court to merely learn that the payee understands the consequences and the significant sacrifice being made through the sale. The court must make "express findings" that the proposed sale is in the payee's "best interest" by somehow improving his or her life (or addressing an urgent need), making the loss of future income and the receipt of a lesser sum now akin to an investment in the future which will enhance his or her life in a meaningful way. This is the primary means by which to "optimize" the lesser sum, namely, using it to augment the payee's life's circumstances in a manner that waiting for the money could never do.

 

Plaintiffs Agreed to Cash, THEN Changed Terms To Structured Settlement Without "Meeting of Minds"

by John Darer® CLU ChFC MSSC RSP CLTC

Not "Pretty Impink"

In the matter of Nicholas Impink, a minor by his parent and natural guardian, Shannon Baldi, and Shannon Baldi, individually v David Reynes, Neil B. Reynes and Maria A. Reynes Docket No. A-3448-06Y5 (935 A. 2d 808; 2007 N.J. Lexis 351), the Plaintiff successfully used a Minor’s Compromise hearing to create a structured settlement in a case where Franklin Mutual Insurance Company had agreed only to pay its policy limits in “cash” in the amount of $300,000.00. 

Insurer had only been willing to offer a structured settlement with a discount off policy limits

Franklin Mutual had only been willing to offer a structured settlement if the plaintiff agreed to accept its as part of a lower priced offer of $250,000.00.

Superior Court of NJ, Appellate Division Overturns Lower Court in Favor of Insurer

However, on November 29, 2007 the Superior Court of New Jersey, Appellate Division reversed the decision of the lower court, stating:

“It is clear from the record that the terms of the agreement called for the payment to be made in a lump sum, not in a structure.  The motion judge impermissibly ordered a change, therefore, to the terms agreed upon.”

The Court concluded that the only role for the Judge hearing the Minor’s Compromise is to determine whether the cash settlement was fair to the minor. 

If not, then the Judge should disapprove the settlement and schedule the case for trial.

For a copy of the Impink Appellate decision Download Impinkcase.pdf

Comments

1. The decision makes it clear that there must be a "meeting of the minds", but what is also interesting are the following observations.
2. Holy crap! The 16.66% discounted offer to structure ($50,000 as a percentage of $300,000) to cover the Franklin Mutual "risk" is WORSE than the effective discount factor charged by many factoring companies like Peachtree Settlement Funding. How the heck do you think that makes Franklin Mutual look? Wonder what annuity issuer was being used or if this was an arbitrary number? What did Franklin Mutual get for playing hard ball? Added legal expenses, really bad PR and they probably overpaid the case.
3. If the adjuster was trying to save off the policy limit they might have done better to think about  a number that works in today's environment. For example, why did they not at least give a shot to an offer of $285,000 in a structure, which would have meant a 5% discount factor?
4. If the case were able to have been resolved by way of a qualified settlement fund it is possible the plaintiffs might have been able to achieve their structured settlement objectives. A structured settlement broker or settlement planner would have needed to be on board in advance of settlement discussions to discuss the costs involved of that route.
5. Under the eventual circumstances the plaintiffs still had other alternative periodic payment options using the full $300,000.00, without regard or concern to Franklin Mutual.